Viant Technology Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; comparisons are with Q1 2021 unless noted. Viant operates Adelphic, a programmatic advertising demand-side platform serving marketers and agencies across digital and other media channels. Financial figures below are in U.S. dollars; dollar amounts are millions unless stated otherwise.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 / prior period |
|---|---|---|
| Revenue | $42.6 | $40.1; up 6.2% |
| Gross profit / gross margin | $16.4 / 38.6% | $15.8 / 39.4% |
| Contribution ex-TAC (non-GAAP) | $27.5 | $26.7; up 3.0% |
| Operating expenses | $56.0 | $54.8 |
| Operating loss / operating margin | $(13.4) / (31.5)% | $(14.7) / (36.6)% |
| Net loss | $(13.6) | $(14.9) |
| Net loss attributable to Viant Inc. / diluted loss per Class A share | $(3.2) / $(0.23) | $(3.1) / $(0.27) |
| Adjusted EBITDA (non-GAAP) | $(3.9) | $4.9 |
| Non-GAAP net income (loss) | $(6.8) | $2.2 |
| Cash from operating activities | $11.6 | $14.8 |
| Cash and working capital at March 31 | $247.9 cash; $256.2 working capital | December 31, 2021: $238.5 cash; $269.1 working capital |
| Debt | $17.5 outstanding under revolving facility | $17.5 at December 31, 2021 |
Investing activities used $2.1 million, including $1.7 million for capitalized software and $0.4 million for property and equipment. Cash increased $9.5 million in Q1 2022; Q1 2021 cash growth included $232.5 million of net IPO proceeds. The $40 million secured revolving facility had $22.5 million of undrawn availability; Viant reported covenant compliance. The PPP loan had been forgiven in 2021.
Material changes and management commentary
- Advertiser spend rose 43.7%, and active customers increased 22.9% to 327 for the trailing 12 months. Revenue growth was 6.2%; management attributed growth outside automotive to a 14% increase, partly offset by an approximately 65% decline in automotive revenue as customers cut or paused advertising amid supply shortages. About 91% of Q1 2022 revenue came from customers that were also customers in Q1 2021.
- Traffic acquisition costs increased 13% to $15.1 million, while total platform operations expense rose 8% to $26.2 million. Management cited higher cloud and third-party service costs and depreciation, partly offset by lower stock-based compensation.
- Reported net loss narrowed, but adjusted EBITDA and non-GAAP net income moved from positive in Q1 2021 to losses in Q1 2022. Stock-based compensation fell to $6.4 million from $17.1 million; these non-GAAP measures exclude stock-based compensation and should be considered alongside GAAP results.
- Operating cash flow declined by $3.2 million year over year. The filing attributes cash-flow movements to working-capital timing and a decrease in deferred revenue, among other items.
Outlook, risks, contingencies, and unusual items
- No specific numerical revenue or earnings guidance is provided. Management expects operating expenses to increase significantly in the foreseeable future as it invests in platform operations, technology, identity resolution, new channels, and sales and marketing; it cautions these investments may weigh on near-term profitability.
- Management believes cash, operating cash flow, and available revolving credit will meet requirements over the next 12 months. Longer-term funding depends partly on generating operating cash flow and access to capital markets.
- Key risks discussed include the COVID-19 pandemic and economic uncertainty, advertising-market and programmatic-adoption trends, customer and advertising-inventory access, cookie-related technology changes, seasonality, and potential changes in advertising spend. The company reported no material changes to risk factors from its 2021 Form 10-K.
- On April 6, 2022, after quarter-end, Viant agreed to pay a customer $6.2 million for termination of certain deferred revenue liabilities and related performance obligations. The balance was reclassified to accrued liabilities; the filing says the customer is expected to continue using the platform. The settlement reduced remaining performance obligations from $6.6 million at year-end to $0.1 million at March 31, primarily through the agreement modification.
- Viant adopted lease accounting guidance in fiscal 2022, recognizing operating lease assets and liabilities. At March 31, lease liabilities totaled $21.5 million; a further $3.6 million of lease commitments had not yet commenced. Ordinary-course legal matters were disclosed, with management stating it did not expect a material effect. The company reported effective disclosure controls and no material change in internal control over financial reporting.
Important facts for investors to verify
- Whether advertiser-spend growth translates into sustained revenue and contribution growth, particularly given the sharp automotive decline and customer concentration changes.
- The drivers and sustainability of the Q1 2022 adjusted EBITDA and non-GAAP net loss, including the impact of operating investments and stock-based compensation; reconcile these measures to GAAP results.
- The timing and cash impact of the $6.2 million customer settlement, and whether the customer relationship continues as expected.
- Operating cash-flow trends, working-capital collection and payment timing, and the amount of revolving-credit availability and covenant headroom.
- Potential dilution from outstanding equity awards and exchangeable Class B units; the filing reports 4.858 million RSUs and 3.771 million options outstanding at March 31, 2022, alongside 47.082 million Class B shares.